RE Sales Exam Practice, Agency, Disclosure

An agent cannot answer a seller's question

"What is the racial background of the buyer"?

If a mobile home has been registered with DMV or HCD, a real estate licensee can handle the transaction.

A broker cannot display two or more mobile homes on the brokerage property without being a mobile-home dealer.

The Agency Relationship Disclosure Act became effective in 1988.

The process is to disclose, elect, and confirm. Confirmation is done in the purchase agreement (deposit receipt).

The agent act without the authority of the principal. Later, the principal accepts the acts of the agent.

This becomes agency by ratification.

As a matter of good practice

a broker who purchase property for his own account should consider having another agent present the offer.

Under the prepaid rental listing service requirement

a prospective tenant who has paid the fee must be provided with at least three available rentals within five days of payment.

In a S corporation

all profits and losses are passed through to each stockholder to calculated against ordinary income.

An agent cannot

answer any questions about one's race.

The California Fair Housing Act (Rumford Act)

applies to everyone in the state. Complaints may be filed with the California Department of Fair Employment and Housing. A homeowner may bring in one roommate and be exempt from this act.

The lead-based paint disclosure

applies to residential one to four dwelling units built prior to 1978; therefore, this would apply to a single-family residence built in 1975. This disclosure is especially concerned with small children who might ingest paint chips.

Inducements to "panic selling" and "blockbusting"

are discriminatory activities by a real estate licensee, which are violations of law.

The law of agency

are found in the Civil Code.

Advertisements that state that the offering is made only to single women or only to persons of a minority background

are in violation of fair housing laws.

Joists are supports that

are parallel to the floor and ceiling.

Electronic records are acceptable to the DRE

as long as they are backed up for a three year period. Upon request by the DRE, a broker must provide paper copies of trust records at the broker's expense.

Jones v. Mayer, a 1968 U.S. Supreme Court landmark decision

bars (stops) racial discrimination on property matters in the United States.

The Agency Relationship Disclosure Act

became law on January 1, 1988, and is found in Civil Code section 2079.

Real estate licenses do not have to be displayed on the wall

but must be kept at the main office of the employing broker.

The district attorney prosecutes law violations

by unlicensed persons.

A statutory requirement

calls for a written agreement between the broker and salesperson for employment; however, it does not have to be on a form approved by the commissioner. A copy of the agreement is to be kept by both the broker and the salesperson for three years.

Construction work of less than $500 in value

can be done by someone who does not have a contractor's license.

Failure to disclose a dual agency

can lead to loss of commission, suspension or revocation of the real estate license, and civil action by the injured party.

Illegal use of the term REALTOR

can result in loss of license. It is also a violation of California real estate law.

A salesperson

cannot act independently of the broker, and no referral fees or commissions can be received through any other source for real estate activities other than through the employing broker.

An unlicensed person (e.g., secretary bookkeeper)

cannot give information regarding a real estate transaction on the telephone or in any way practice real estate for compensation.

A seller of one to four dwelling units must

disclose if there is a Mello-Roos Tax lien against the property. Mello-Roos municipal bonds may be used to finance the improvements of streets, gutters, and sidewalks.

A real estate license can be restricted as to term

employment to a particular broker, limitation to a certain type of activity, and the requirement of the post in got a surety bond.

Net operating income minus debt service

equals the cash flow of income property.

Brokers must keep all records

for a minimum of three years from the date of closing, or if not closed, from the date of listing.

An injured party

has two years in which to file legal action on the Transfer Disclosure Statement. An amendment has a three-day right of recission.

If you give the Real Property Transfer Disclosure Statement after acceptance of offer

he buyer has five days if it is given by mail (or three days if give in person) to rescind the contract. The Easton v. Strassburger case reaffirms that both the seller and the agent must make full disclosure of material facts that may be known or unknown to a potential buyer.

A licensee may appeal to the court

if a decision of the commissioner is deemed unfavorable to the licensee.

Unstable real estate values tend to occur

in areas of mixed home values.

The maximum amount of compensation the DRE will pay out of the recovery account per transaction

is $20,000, even if a victim holds an uncollectible judgment for more than $20,000.

The maximum amount payable from the recovery account per transaction

is $20,000. The maximum payable per license (multiple transactions) is $100,000.

A land locator

is a broker who helps to sell government property and is required to have a real estate license because a commission is earned.

Failure to disclose material facts, whether in real estate or other fields

is a form of fraudulent misrepresentation.

Real Estate Principles

is a required course before applying for a license.

Misuse of the trade names REALTOR or REALTIST

is both unlawful and unethical.

A California real estate license

is good for negotiating anywhere in the state no matter where the property is located (e.g., property may be out of state).

The company dollar

is gross income minus commissions.

The Natural Hazards Disclosure states whether or not a property

is in an earthquake zone.

An investor of commercial property

is interested in the property's net income.

Warranty of authority states that a principal (seller-employer)

is liable for the acts of the agent (employee) within the scope of authority granted. Therefore, both the seller and agent may be liable for any misrepresentations. (If the agent exceeds the authority, the agent alone may be liable for resulting damage).

A broker's failure to make required disclosure

is not excused, even if the buyer has a right of rescission.

The term REALTOR

is owned by the National Association of Realtors and only those members may use the term.

Worker's compensation

is required for all real estate licensees, no matter whether the licensee is an independent contractor for taxation purpose.

The Mello-Roos Tax lien disclosure

is required from seller to buyer on all types of property.

The Natural Hazards Disclosure

is required from seller to buyer.

A license

is required to act in real estate matters for compensation, including property management and mortgage lending.

The property manager

is responsible for routine maintenance and is to be employed under a written management agreement. The issue of property management should be decided upon before one buys investment property.

A property manger

is responsible for routine maintenance, is employed under a written agreement, and must have a broker's license.

An unlicensed person who practice real estate

is subject to a fine of up to $10,000, along with other possible actions by the district attorney.

Radon gas

is tested by a spectrometer.

The relationship between the real estate broker and the salesperson

is that of employer and employee under real estate law.

A blind ad

is where the broker does not indicate his or her license status or company name in an ad.

n addition to the "Homeowner's Guide to Earthquake Safety" being provided to buyers of residential property built prior to January 1, 1960

it is also required on a masonry building built prior January 1, 1975, containing portions of wood frame construction.

A real estate licensee cannot

make a secret profit and must disclose if he or she is buying property for his or her own account.

An owner (non license) may

make a secret profit. Owners of property do not have to disclose what they paid for their property.

A temporary 150-day real estate license

may be issued to a qualified license applicant whose name appears on a delinquent child support payment list.

Mello-Roos tax funds

may be used to finance the cost of subdivisions.

The department of Real Estate recovery account fund

may pay only a maximum of $20,000 per transaction to a person who hold an uncollectible court judgment against a real estate licensee, even if the person holds a judgment for $25,000. The maximum payable in behalf of one licensee is $100,000.

In-house sales

might give rise to an undisclosed dual agency.

Eighteen hours of the 45 hours of required continuing education

must be about consumer protection.

A Homeowner's Guide to Earthquake Safety

must be given on the sale of one to four dwelling units of wood frame construction built prior to 1960. The Alquist-Priolo Special Studies Zones Act requires disclosure of property located within one-quarter of a mile of a fault line.

A Buyer-Broker Representation Agreement

must be in writing.

Mortgage (broker loan) disclosure statements

must be kept for three years. It is illegal and discriminatory for a lender to charge a translation fee for a foreign language-speaking borrower.

A broker who shows a property in which the broker has an option to purchase

must disclose anticipated profit and that he is a principal.

A seller of property in an earthquake fault zone, or the seller's agent

must disclose to the buyer that the property is situated in an earthquake fault zone. This can be done in Real Estate Transfer Disclosure Statement or in the Purchase Agreement.

A broker who wants to use a fictitious business name

must file a fictitious business name statement with the county clerk, have the notice published in a newspaper of general circulation once a week for four weeks and apply to the real estate commissioner for approval of the use of the name.

An unlicensed assistant who prepares an advertisement

must have prior written approval by the employing broker.

Both the buyer's agent and the seller's agent

must render a competent and diligent visual inspection of the accessible areas of one to four dwelling units.

Home sales can be a good indication

of the consumer price index because a home is the largest purchase the average consumer makes.

A real estate broker can legally

offer gifts as an inducement for business, whether for sales or loans, providing the conditions for earning the gifts are in any advertisements.

There must be a definite termination date

on all exclusive listing agreements.

here are 10 members, plus the commissioner

on the real advisory commission.

After passing the real estate exam

one has only one year from the date of the exam was taken in which to mail the application for the license.

The desk cost includes

operating expenses for the office, including salaries, divided by the number of salespeople.

The Unruh Civil Rights Act

prohibits discrimination by businesspersons.

The Americans with Disabilities Act

provides for the disabled. This act could require the removal of barriers from commercial properties.

"As is" sales of one to four dwelling units

require a Transfer Disclosure Statement.

Properties of one to four dwelling unit built prior to 1978

require a lead-based paint disclosure. These properties are referred to as "target housing".

An attorney-in-fact (one who has been given a power of attorney)

signs the principal's name first, then his/her name followed by "attorney-in-fact". You do not have to be an attorney-at-law to be an attorney-in-fact.

If a promissory note is offered as a deposit on an offer

the broker must advise the principal of this material fact.

Even though a salesperson works for a broker as an independent contractor

the broker should still provide workers' compensation coverage.

If the Real Estate Commissioner needs legal advise

the commissioner goes to the state attorney general.

Within its own county

the district attorney's office prosecutes law violations.

When a salesperson transfers a license

the new broker must advise DRE in Sacramento within five days of new employment.

A foundation plan shows

the piers, footing, subfloors, and columns of a building.

Under real estate law

the salesperson is the employee of the broker. Do not confuse with the independent contractor status that most licensees choose for tax purposes.

If a buyer hands a deposit check to an escrow clerk

then a broker should reflect it in his files, and does not have to keep a trust record of that check.

A fictitious business name refers

to "doing business as".

Competing brokers agreeing

to set commissions at a certain percentage are in violation of antitrust laws.

Within three business days

trust funds received by a broker are to be placed into either a neutral escrow depository, the hands of the principal, or the broker's trust fund account unless written instructions from the buyer are to the contrary.